Investing in cryptocurrency has been a hot-button topic for the better part of the last decade. What began with only Bitcoin has since exploded into one of the biggest and most volatile forms of investing there is. Ethereum is considered the second-most popular cryptocurrency out there. But before you go looking for an ETH to USD converter, it helps to know about some of the simplest mistakes to be avoided when investing in Ethereum.
Knowing Nothing About Crypto
The thought of investing in cryptocurrency can be an exciting one. It is hard to ignore all of the stories about investors hitting it big when they sell ETH and other cryptocurrencies. That said, don’t go rushing into investing just yet.
Stop and evaluate your knowledge of cryptocurrency first. Knowing the basics is a must before you start putting your actual money into it. You wouldn’t get fully invested in something else when you know nothing about it, and this should be no different. Take some time to become educated in different crypto projects, what the goal of each company is, and how you can take steps to become a better investor.
Ignoring the Fees
There are a ton of ways to buy cryptocurrency. Whether it be in a peer-to-peer transaction, using a cryptocurrency exchange, or something else, it can be all too easy to jump right into buying without understanding one important factor: gas fees.
Buying cryptocurrency with any particular form of payment can come with substantial fees, not to mention additional charges if you use a credit card. Take the time to learn about the fees and which exchanges offer lower fee rates. It will wind up saving a lot of money in the long run, which can then go back into your investing portfolio.
Thinking Short-Term
Perhaps the worst mistake cryptocurrency investors could make is thinking in the short term. Investing in cryptocurrency is a long-term play. Just look at the history of Bitcoin. Meteoric rises and massive falls are commonplace. Though the volatility of cryptocurrency has evened out a bit compared to the early days, it is anything but a consistent and reliable form of investment.
Far too many crypto investors get into it thinking that they are going to make one quick flip and cash in. That’s not how it works, for the most part. There are those investors who take huge risks and get lucky. For the most part, those stories end in heartbreak. Keep your eye on the long-term prize and it will likely lead to less disastrous results.
Online Storage
Storage is an important part of owning cryptocurrencies. An easy mistake to make is storing those digital currencies in an online wallet. They are quite common and easy to access. But it is the latter that makes it such a security risk. Even the most well-protected exchanges have been known to experience security breaches. Even one could wind up costing investors in a big way. Thankfully, there is an alternative.
Offline, or “cold”, storage, is the safest way to operate. The crypto wallet is kept on a separate hard drive that can be stored away safely when not in use. By being disconnected from the online world, there is no threat of a digital compromise. Those funds will be kept as safe as possible, with only the user knowing the key phrase. The worst thing to happen to a crypto investor is a hack. Cold storage isn’t even something that needs to be considered in the back of the mind because it is a totally safe method.
